IMF Countries Back Recovery Moves, Governance Reforms

• Author: International Monetary Fund

In a communiqué, the International Monetary and Financial Committee (IMFC), chaired by Youssef Boutros-Ghali, the Egyptian Finance Minister, said IMF members were ready to act further "to revive credit, recover lost jobs, and reverse setbacks in poverty reduction."

The 24-member IMFC emphasized that agreed financial sector and regulatory reforms should be completed without delay and called for the Fund to develop a new, more comprehensive mandate to reflect its more central role in the global economy.

Backing for G-20 plans

The IMFC, which provides policy guidance to the 186-member Fund, met as part of the Annual Meetings of the IMF and the World Bank being held in Istanbul, Turkey. The Meetings are taking place just after the summit of leaders of the Group of Twenty (G-20) industrialized and emerging market economies in Pittsburgh on September 25.

The G-20 leaders provided political support for a shift in country representation at the IMF of at least 5 percent toward dynamic emerging market and developing countries. They also had pledged to sustain the strong policy response to counter the global economic crisis.

Building on the decisions of the Group of Twenty, the IMFC called on the Fund to assist the G-20 countries with the agreed mutual assessment of their economies by developing a forward-looking analysis of whether policies are collectively consistent with more sustainable and balanced trajectories for the global economy.

IMF Managing Director Dominique Strauss-Kahn said the Meetings were a unique opportunity to shape the post-crisis world. He pressed his idea that the Fund should become a global lender of last resort, including by providing a pool of reserves so that countries would not have to build up excessively large reserves of their own, or "self-insure" in case of a crisis.

The IMFC said the Fund should consider whether there is a need for enhancing financing instruments and whether this can offer credible alternatives to self-insurance, while preserving adequate safeguards. "We also call on the Fund to study other policy options to promote long-term global stability and the proper functioning of the international monetary system."

Fund mandate and governance reforms

Boutros-Ghali said the IMFC discussed reform of the IMF, with the aim of giving it "a clearing house function for the (economic) policies of the world."

The IMF had played a central role...